The Degree of Operating Leverage for Madrigal Company Is 2

question 118

True/False

The degree of operating leverage for Madrigal Company is 2.The actual operating income is $14,000.If the company expects a 25% increase in sales,operating income should increase by $3,500.

---

Definitions:

Unearned Ticket Revenue

Income received by a company for goods or services to be delivered or performed in the future; it is considered a liability until the service is performed or goods are delivered.

Adjusting Entries

At the close of a fiscal period, entries recorded to assign revenue and costs to the actual period of occurrence.

Advance Rent

Prepaid rent, which is an amount paid prior to the period to which it relates, often accounted for as a current asset until the period to which the rent applies.

Utility Bill

A bill sent by a utility company (electricity, gas, water, etc.) charging the customer for their usage of the service.